To calculate the future value of a deposit with simple interest, we can use the formula:
Future Value = Principal + (Principal × Rate × Time)
In this case:
- Principal (P): $10,000
- Rate (R): 6% (or 0.06 as a decimal)
- Time (T): 5 years
Now we can plug the values into the formula:
Future Value = $10,000 + ($10,000 × 0.06 × 5)
Calculating the interest:
$10,000 × 0.06 × 5 = $3,000
Now, let’s find the future value:
Future Value = $10,000 + $3,000 = $13,000
So, the future value of $10,000 on deposit for 5 years at a simple interest rate of 6% is $13,000.